Moody's lifts Yuexiu REIT view to stable

Moody's Investors Service said it changed the outlook on Yuexiu Real Estate Investment Trust to stable from negative.

The agency also affirmed Yuexiu REIT's Baa3 issuer rating, along with the provisional Baa3 senior unsecured rating on Yuexiu REIT MTN Co. Ltd.'s medium-term notes program and Baa3 senior unsecured rating on the guaranteed medium-term notes issued under the program.

The outlook revision follows news that Yuexiu sell a project in Guangzhou and use the majority of the RMB 1 billion net proceeds to repay existing debt, Moody's said.

The stable outlook also reflects an expectation that Yuexiu REIT's debt leverage will decline, while the proposed sale of the Guangzhou project is indicative of its commitment to reduce leverage, the agency added.

The sale proceeds will reduce leverage to 8.8x and 8.7x in 2019 and 2020 respectively, from about 9.9x for year-end June 30, 2018, Moody's said.

Expected strong operating cash flows from its remaining properties also will more than offset the loss of cash flows from the sold property over the next 12- to 18-months, the agency said.

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